(Editor’s Note: This is the next in a series of guest blog posts about contract staffing, courtesy of Top Echelon Contracting, the recruiter’s back-office solution.  Similar posts will appear in future issues of The Pinnacle Newsletter Blog.)

According to a recent survey by the National Association of Colleges and Employers, companies are planning to increase their use of interns by 8.5% this summer.

The majority of these companies are planning to pay their interns, but if you have clients who are considering unpaid internships, this is a good time to remind them of the strict rules and risks of doing so.

In most cases, interns must be paid.  In order for internships to be legally unpaid, they must meet the following six criteria, as outlined in the Department of Labor’s (DOL) fact sheet on Internships Under the Fair Labor Standards Act:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees, but works under close supervision of existing staff;

4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job at the conclusion of the internship; and

6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Over the past couple of years, the DOL has been cracking down on illegal unpaid internships, so it is important that your clients handle their internships properly. You may want to suggest that they hire interns on a contract basis and outsource the employment of those interns to a contracting back-office.

That way, they can avoid the risk of not paying their interns without taking on the additional costs (benefits, employer taxes, etc.) and administrative burdens that comes with making them direct-hires.

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888.627.3678
DFledderjohann@TopEchelonContracting.com
Connect with Debbie on LinkedIn.
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(Editor’s Note: This is the next in a series of guest blog posts about contract staffing, courtesy of Top Echelon Contracting, the recruiter’s back-office solution.  Similar posts will appear in future issues of The Pinnacle Newsletter Blog.)

If you’re running your own back-office and offering benefits to your contractors, it is critical that you’re familiar and compliant with COBRA. COBRA, which stands for The Consolidated Omnibus Budget Reconciliation Act, was enacted in 1986. It requires employers with more than 20 employees to offer continuation of health care coverage when an employee loses coverage due to status changes, such as resigning, losing a job, or having hours reduced.

In addition to requiring employers to offer continuation coverage, there are numerous notification requirements that come with COBRA.  For instance, you must send a notice to employees explaining their COBRA rights when they first come onto your plan, and you must send another notice when they lose coverage so that they know how to elect COBRA.

The Department of Labor AND the IRS regularly conduct COBRA audits (and enforce penalties), so this is not something you want to get wrong.  The IRS is actually making it easier to comply by publishing a checklist of items it reviews during its COBRA audits, according to Infinisource, which is the third party COBRA administrator that Top Echelon Contracting uses.  This checklist, which is called “Audit Techniques and Tax Law to Examine COBRA Cases (Continuation of Employee Health Care Coverage),” explains:

• Which documents the IRS typically reviews during an audit.
• How the excise tax for noncompliance is calculated and applied.
• How election waivers work.
• Key definitions.

If you’re running your own back-office and are required to offer continuation coverage under COBRA, you may want to check this out.  You may also want to point this out to your clients who have to comply with COBRA.

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888.627.3678
DFledderjohann@TopEchelonContracting.com
Connect with Debbie on LinkedIn.
Follow Debbie on Twitter.